Cypherpunk is dead Long live cypherpunk | Artem Brazhnikov (Octant) at ETHConf

Can you please raise your hand if you know what Cypherpunk is? Okay, there are people who don't know. So I'm going to mention this . So, Cypherpunk . So, Cypherpunk is a movement that started in the 80s and 90s that said we need to create systems and protocols based on the values ​​of privacy and cryptography.

And Ethereum started partly based on these values. And now Cypherpunk is dead. Long live Cypherpunk. This is one of those phrases we usually utter throughout history when we are going through an important cultural transition. The king is dead.

Long live the king. So, Ethereum is entering its institutional era in cryptocurrency. And for some people, it feels like the end of a revolution. I would like to argue that this is just the beginning. So over the next 15 to 20 minutes, I'm going to talk a little bit about why I think this is not the end, and how we can work with institutions.

You never change things by fighting the existing reality. To change something, build a new existing one. So, these are the words of Buckminster Fuller. As we seek to build new systems, the old systems will decline. I think we need to build bridges.

This is the first step. Instead of burning bridges like some other previous cultural movements, we need to find a way to collaborate with new institutions entering the crypto ecosystem. And acceptance is not the end of the punk ethos. The previous era of cryptocurrencies may be over, but I think we are entering a new era of permissionless money and programmable money. And the third part is that this could be the start of what the community is excited about in terms of a new way of building it.

I sense a certain sentiment in the community, listening to podcasts and talking to people who say that Wall who say that Wall Street is taking over and our values are falling behind. And to be honest , I also feel a bit nostalgic for 2018 , when I was in Room 707 in Berlin, building hard forks, sitting in a hoodie, and some people said it was the era of colored shirts, but Ethereum is for everyone. So you can wear a shirt, you can wear a hoodie, and it will be the same foundation for everyone. But we have a problem. We have a problem with security, privacy, and identity.

And these vulnerabilities are architectural. This is a design problem. Security and privacy—it's not very pleasant. This is an inherent condition of protecting these digital assets on the blockchain. We have systems that we've been building for the last 20 years that centralize data in honeypots.

And the problem is that now intelligence is becoming greater, and it is much easier to find vulnerabilities both in the client-server architecture and at the periphery of blockchain the periphery of blockchain systems, as well as bridges through staking and cross-chain messaging. And these are not just words. This year we have seen many attacks, much more sophisticated than before. Recently, $292 million was used in the Kelp DAO . In 48 hours, $13 billion was withdrawn from the Aave protocol, one of the most stable protocols in the space.

And over $800 million has been stolen this year alone. This is something we need to take seriously, because if you want to bring this technology to new companies and new users, we need to build security and privacy into a different design paradigm. I wrote about this in my article titled Sovereignty Paramount. This was the first stress This was the first stress test for DeFi, and it failed. Artificial intelligence is rewriting and reprogramming the threat model.

So, with the exponential growth of machine intelligence, errors will be found much faster. These are some numbers and some data that the cost is decreasing, the percentage of errors found is increasing. For example, a bug was recently found in Zcash that had existed since 2022. And only AI was able to find it. Find it.

And soon enough, Anthropic's Mythus will be released, and no one knows how many vulnerabilities will be found. So, all institutions are slow, and they were created for human attackers. And that assumption disappeared. And our system will become smarter. So we need to bring new ways of working to Ethereum and new ways of protecting our data and assets.

So for an agent-based internet, we need to build a system where we don't verify, we trust. We don't trust, we verify. Sorry about that. So in the old model, the legal reputation system was built for a few well-known actors. J.

P. Morgan works with you, works with other institutions. If something goes wrong, they can read logs, conduct audits, and reverse transactions. Now change and look from a different perspective. We have billions of agents executing trillions of different transactions 24/7 .

And the old institutions simply can't keep up with it. The service agreements they are going to write will be a joke to agents because they simply won't be able to handle the number of transactions and the workload they will be carrying. So the only answer we have is cryptography. In particular, zero- disclosure cryptography, which allows you to prove, without revealing the input data, that a calculation was performed correctly. And this is something that institutions should pay attention to.

The data remains with the users without being disclosed, and at the same time you can prove that the calculation was performed correctly. This is mathematics. This is not natural language. And we can no longer rely on natural language. A technology similar to cipherpunk is what Wall Wall Street needs in the new technological substrate.

So, paradoxically, many people say that Cypherpunk is dead, and now I say, "Long live Cypherpunk," because the very architectural solutions and systems that Cypherpunks have been creating since the 80s and 90s are the ways that institutions can rely on. Properties such as decentralization create systems without a single point of failure. Properties such as reliable neutrality reliable neutrality , which allows everyone to play by the same rules. This is essentially counterparty risk in finance for institutions. Are they looking to see if my assets are safe and secure?

Our users will have access to them 24/7. Can we withdraw assets at any time? And the possibility of verification the possibility of verification . So anyone can independently check whether the rules were followed rules were followed . Without intermediaries and without trust.

And Ethereum has proven this with 11 years of no downtime. Prove that this property is also operational stability. So, how do we ensure Ethereum works for the next 100 years? These properties can only exist with funding. What we are currently seeing in the Ethereum ecosystem is that the role of the Ethereum Foundation, the primary organization primary organization that funds Ethereum and promotes development, is narrowing.

This is probably a natural progression, especially given the amount of assets they have to fund in the future. So, they will narrow their focus, but this requires new coordination. This requires community coordination, and we need new models of decentralized financing. And we need new sources to build self-sustaining systems self-sustaining systems that will preserve the spirit of cyberpunk for both the community and the institutions that join the blockchain. And that's why we need collective strength.

DAT, which stands for Digital Asset Treasuries, is a new type of structure where these organizations hold significant amounts of ETH and other assets, along with other large token holders, which can provide a new chapter of long-term Ethereum funding. Octant is creating a self-sufficient engine to finance the Ethereum ecosystem and other ecosystems. This is a project we have been creating for the past 3 years. It runs on Ethereum staking rewards with proof of stake, not donations or token sales. 100,000 ETH was invested by an organization called the Golem Foundation, which generates a sustainable revenue stream and funds ecosystem grants.

It funds projects and covers Octant's expenses. This is not just a model, it is a sustainable model. And over the past 3 years, profitability financing has been proven to work . And Ethereum staking reward cases can sustainably fund public goods and ecosystem growth ecosystem growth . So, this is a very general overview of what it looks like.

The Golem Foundation deploys assets in Ethereum, which generates rewards in ETH, and these ETH are given to users and projects. And users can decide how assets are distributed. I want you to look at the 100,000 ETH that remains untouched. And this is exactly the property we want. And as we see new organizations emerging, large organizations like Sharp Link, Bitmain, and others, they are all addressing this problem.

How are we going to finance the future in the long term? So, we need to use systems based on profitability financing, where assets are placed and there is a sustainable revenue stream to fund ecosystem and business development. Over the past 3 years, more than 130 projects have been funded and approximately $18 million has been distributed between projects and the community. So, this model has proven its effectiveness. 100,000 ETH has remained intact and idle for the past 11 years, fueling the Ethereum ecosystem and allowing capital to continue to operate.

This way, grants go to Ethereum-related projects and developers, and we can work together with the ecosystem to create new self-sustaining models. Some of our products that can power the same model are called Octant Vaults. Octant Vaults function as perpetual funds for the things you care about. If you are familiar with DeFi, there is a standard called 4626. It is a standard repository that exists across the board, allowing investors to place capital and generate revenue streams.

We created a model that is basically replicable and returnable. Various parties can place capital into these vaults, and this consistently generates flows and funds things that are defined as liabilities. So, they create a funding stream. And we can deploy different device strategies and limit return flows in the direction you choose. The allocated yield acts as insurance.

This property does not exist in other repositories. So, the yield that still remains in the contract can act as insurance against losses, which is an interesting property that protects the capital that investors place. And thus a model is created called the “Power of Profit–Give.” Fund what's important to you, continuously, without spending the principal . Now the product, our Octan grants.

This is the level of distribution. This level of distribution allows for the placement of assets after they are deployed, it allows users and providers of capital to choose where the funding goes. So, there are different ways to define a distribution. There are different models of community voting. It could simply be a budget allocation by capital providers.

Something called quadratic funding, where a user's voice matters regardless of the size of their ticket. And capital providers choose which model. Next week we will launch our first funding event in the updated V2 ecosystem. So, V2 turns deployed assets into sustainable funding streams. Um, one of the final thoughts one of the final thoughts I want to leave you with is that we usually say, or there's this sense that the first generation of the Internet was about reading, the second generation was about reading and writing, and the third generation was about reading, writing, and possession.

I have a different opinion. I don't think it's about ownership per se. I think it's a matter of co-ownership. This may surprise some, but you don't actually own your assets on- chain. What you own is the key that opens access to your asset.

When you work with a bank, you are acting under an agreement between two different parties, which is governed and enforced by the legal system. In the blockchain, this is a public state that is copied to thousands of different computers. And just because it's funded, this public infrastructure is funded and developed by software developers from the Ethereum ecosystem, institutions can come in and create chains. Users can access their assets 24/7 at the speed of light. That's why I say it's about common property.

So , for the network to remain neutral and sustainable, access must remain open to all. That's why I believe we need to preserve the same properties that have existed in the ecosystem for the past 10 years. And then build on that. Ethereum is currently building the most secure ZK EVM ecosystem, which will come in subsequent updates over the next year or two, allowing people to prove computations. Artificial intelligence will be based on this , and if two or three years ago AI's conclusions were proven correct, then calculations were mostly a hobby.

Now this is reality. And that's the only way we can actually build an ecosystem that exists with assets on the network and uses the genetic internet together with the Ethereum ecosystem. So, now is the time for institutions to join the network, but that doesn't mean the community should sacrifice the properties and principles on which we build it. I repeat that, in my opinion, these are exactly the qualities that these institutions need. And they will give them confidence that the counterparty risk is lower than in existing systems, especially as the amount of intelligence grows.

So, a user-owned financial system and Wall Street can work together to create the safest and most reliably neutral level of settlement that works 24/7 . So let's keep Ethereum stable and neutral. And everyone will be able to access their assets 24/7 for the next thousand thousand years. This is what Octan finances. Thank you.